Still Waiting For Brexit Climax

Overview: The Brexit drama continues to command attention. A vote on leaving without an agreement will be held today, and if that fails, there will be a vote tomorrow on an extension. Meanwhile, the first increase in headline US CPI in four months failed to impress as the year-over-year pace fell to 18-month lows. Today's import prices are part of the inflation picture, especially the non-oil component, which may give insight into consumer goods inflation.  Equity markets are giving back some of yesterday's gains. Recall several Asian equity markets gapped higher on Tuesday. The Shanghai and the Kospi's gaps were filled. The Nikkei and Hong Kong's were entered by not closed. Taiwan's Taiex did not enter its gap and instead moved higher. Europe's Dow Jones Stoxx 600 is off marginally for a second day. The S&P 500 may again be stalling near 2800. The US 10-year note yield slipped through 2.60% for the first time this year yesterday but is back above it now. While most benchmark yields are slightly softer, poor data and the spillover from the US took Australian and New Zealand 10-year yields five and seven basis points lower, respectively today. Their respective currencies are also the weakest today, off about a quarter of a percent through the European morning. Sterling rose from around $1.3050 in early Asia to about $1.3150 in the European morning, which is about where it stalled in European afternoon and US yesterday. Emerging market currencies are little changed and mostly +/- 0.25%. 

Asia Pacific 

The Bank of Japan's two-day meeting begins tomorrow. The economic backdrop is not particularly favorable. Earlier today, Japan reported a 5.4% decline in February core machine orders. The median Bloomberg forecast was for a 1.5% decline. The series is supposed to offer a 6-9 month lead on capital expenditures. The report plays into expectations that the BOJ may lower its assessment for output and exports. There was also an upside surprise. The tertiary index (service sector) rose 0.4% in January. A 0.3% decline was expected. The weakness in December though was more pronounced than initially reported, and it was revised to -0.5% from -0.3%.  

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Read more by Marc on his site Marc to Market.

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